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VI. TRADE POLICIES BY SECTOR 
(1) AGRICULTURE  
1. Soon after Armenia's independence in Septembe r 1991, 864 collective and state farms were 
privatized and about 321,000 private farms created.1  By 2006 the number of private farms had 
increased to about 340,000, as more public land wa s privatized by open tender.  Farms are not only 
small in size (the average is about 1.4 ha), they are also fragmented, with about 1,200,000 parcels of 
land shared among the 340,000 farms.  The size vari es considerably from 0.62 ha in the irrigated 
Ararat Marz to 3.8 ha in the extensive crop and liv estock raising Syunik Marz.  If agriculture is to 
develop further, farms and holdings  will need to be consolidated in order to achieve economies of 
scale.  A major impediment to consolidation and a functioning land market was poor registration of 
land parcels and the issuance of titles.  During the review period, a project sponsored by the World Bank and supported by other donors h as greatly improved this situati on, and most land parcels have 
now been surveyed and register ed, and titles have been issued.
2  
2. Agriculture contributed an average of 18.8% to Armenia's GDP during 2004-08, and made up 
about 46% of employment (Chapter I(1)).  However,  in addition to the problems associated with farm 
structure, the growth and competitiveness of the sector is restricted by various topographic and 
climatic factors;  for example, most of the land is  at an altitude of over 1, 000 metres;  and over two 
thirds is on slopes of 6º or more.  Armenia is a net food importing country and the structural and other 
limitations to agricultural development mean that ag riculture is unlikely to be the main engine for 
economic growth.3  Nevertheless, even if the rest of the economy continues to grow at a faster pace, 
agriculture will remain an important part of employ ment and GDP (Chapter I).  Furthermore, several 
food processing sub-sectors, such as alcoholic a nd non-alcoholic beverages and cheese, have good 
potential for development using agricultural raw materials. 
3. The immediate post independence period saw a sh arp decline in gross value of production and 
an even sharper decline in net production as the newly privatized farms fo cussed on self-sufficiency 
rather than sales.  The recovery in the late 1990s was stunted by drought, and it was not until about 
2002 that the value of agricultural production recovered to the level of ten years earlier.4  Since then 
the gross value of production has increased steadily (Table VI.1). 
Table VI.1 
Value of gross agricultural production, 2000-08 
(Current dram million) 
2000 2001 2002 2003 2004 2005 2006 2007 2008 
281,173 351,016 377,654 410,138 504,078 493,018 555,922 633,878 637,292 
Source:   National Statistics of the Republic of Armenia. 
4. In general, the production patterns of speci fic commodities follow a similar path to the 
general pattern for gross agriculture production, excep t with greater year-on-year variation.  That is, 
there was a sharp decline in the early 1990s;  recovery;  another drop in production in the late 1990s;  and then an unsteady but sustained increase in producti on.  Given the very small size of agriculture 
                                                     
 
1 Information provided by the Armenian authorities;  and Haykazyan and Pretty (2006). 
2 World Bank online information, "Title Registration Project (P057560)".  Viewed at:  
http://web.worldbank.org/external/projects/main?m enuPK=228424&theSitePK=4 0941&pagePK=64283627&pi
PK=73230&Projectid=P057560 [July 2009]. 
3 Kernan et al. (2002). 
4 FAO online information, "FAOSTAT".  Viewed a t:  http://faostat.fao.org/site/339/default.aspx 
[July 2009]. Armenia WT/TPR/S/228
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holdings in Armenia it is not surprising that pr oduction increases have been greatest for the most 
labour-intensive products – fruits and vegetables.  The recovery since 2002 has been particularly 
strong for apples, grapes, potatoes, tomatoes, a nd vegetables.  Other more extensively produced 
products also recovered, but to a lesser extent (Table VI.2 and Chart VI.1). 
Table VI.2 
Production of selected agricultural products, 2003-08 
 2003 2004 2005 2006 2007 2008 
Apples (tonnes) 52,800 56,000 155,000 87,300 112,000 118,000 
Barley (tonnes) 68,273 131,138 110,771 49,476 162,533 149,091 
Grapes (tonnes) 81,600 148,892 164,353 201,371 218,883 185,831 
Potatoes (tonnes) 507,518 576,427 564,211 539,477 579,571 647,215 
Tomatoes (tonnes) 225,573 229,478 234,948 319,285 321,472 275,848 
Vegetables fresh n.e.s. (tonnes) 157,534 146,199 176,377 176,900 216,800 502,553 
Wheat (tonnes) 220,977 299,900 265,700 152,900 263,733 225,700 
       
Cattle meat (tonnes) 29, 921 33,406 34,400 40, 400 43,300 49,300 
Cow milk, whole, fresh (tonnes) 498,100 535,831 557,300 580,300 604,400 623,000 
Hen eggs, in shell ('000) 498,100 557,600 514,000 460,000 521,200 574,900 
Pig meat (tonnes) 11,508 8,505 9,400 14,100 13,300 7,500 
Source:    FAOStat (2003-08);  and information provi ded by the Armenian authorities (2008). 
0100,000200,000300,000400,000500,000600,000700,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008Source: Chart VI.1
Production of selected agricultural products, 1992-08
FAO Stat (1992-08);  and information provided by the Armenian authorities (2008). Grapes (tonnes)
Potatoes (tonnes)
Wheat (tonnes)
Hen eggs, in shell ('000)
 
 
 WT/TPR/S/228 Trade Policy Review 
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5. Despite the limitations mentioned above, ther e is considerable potential for increasing 
agricultural productivity, for example, through improved irrigation.  Armenia has about 7.4 billion m3 
of water resources annually, and uses around 2.5 billion m3 for irrigation.  However, much of the 
irrigation system was constructe d before independence and relies heavily on electrically powered 
pumping, which has high running costs and is ineffici ent.  Switching to more efficient gravity systems 
is very capital expensive.  Nevertheless, some tens  of millions of dollars have been invested in 
increasing the capacity of Alpine water reservoirs over th e past five years, but it is difficult to quantify 
precisely how much has been spent and more is need ed to better exploit the potential for irrigation. 
6. Another impediment to agricultural devel opment is the lack of available finance 
(section (4)(ii) below).  Some finance has b een provided through various loan schemes, some 
supported by donors and non-go vernmental organizations.  However, according to the authorities, the 
absence of a national income insurance scheme mean s banks perceive loans to farmers as high risk 
even though over 95% of loans are repaid.  In add ition, Armenian banks have limited resources.  
Thus, banks are reluctant to lend to farmers, and loans to agriculture represent only 5.5% of value 
added in the agriculture sector.  The Agricultu ral Cooperative Bank of Armenia – Crédit Agricole 
(ACBA) has 37 branches in Armenia, including 5 in Yerevan, and a customer base of around 350,000.   
7. The uncertainty about foreign ownership of  land in Armenia may reduce the level of 
investment from abroad.  Article 31 of the Cons titution states that foreign citizens and persons 
without citizenship shall not have the right to ow n land except in cases prescribed by law.  Although it 
is possible for foreigners to lease land (Chapter V(1 )(ii)), the prohibition on foreigners owning land is 
likely to deter foreign investment in agriculture. 
8. Armenia is a net food-importing country.  Th e main imports are wheat, meat, tobacco 
products, and distilled alcoholic beverages.  As would be expected, given its size and geographic 
proximity, Russia is the principal source for some of the main imports:  out of a total of US$88.7 million in wheat imports in 2008, 82% were  from Russia; and out of total imports of 
US$24.1 million in safflower, sunflower, and cotton seed oil 57% were from Russia.  However, for 
meat:  the United States is the main supplier of po ultry meat (61% of a total of US$39.1 million);  
India is the main supplier of frozen bovine meat ( 95% of a total of US$21.6 million);  and Brazil is 
the main supplier of meat of swine (59% of a to tal of US$20.7 million).  Armenia's main agriculture 
export is brandy most of which goes to Russia (85% of a total of US$141.4 million).
5 
9. According to the authorities, Armenia has no quant itative restrictions on exports or imports.  
Available budgetary funds for agricu lture are concentrated on pest a nd disease control, marketing and 
promotion services, and infrastructure (Table VI.3 ).  Several measures are supported by the World 
Bank or governmental aid programmes:  in 2007 measures to combat avian influenza were supported 
by the World Bank and Japan, and the World Ba nk supported marketing and promotion services, as 
did the International Fund for Agriculture Development. 
10. Agriculture policy is the responsibility of the Ministry of Agriculture, which includes the 
central administration and provincial-level inspec tion staff.  In addition, each province has an 
agricultural department that is separate from the Mini stry.  The Ministry of Agriculture is responsible 
for seven research centres covering the main agriculture sectors and i ssues, such as:  agriculture and 
plant protection;  agri-chemistry and reclamation;   cattle breeding and veterinary;  fruit growing and 
wine making;  vegetable-gourds;  and industrial crops.  The Academy of Agriculture of Armenia and 
the Armenian State Agrarian University plus other governmental and private educational and research 
institutions provide technical training and research facilities. 
                                                      
5 COMTRADE database (2009). Armenia WT/TPR/S/228
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Table VI.3 
Domestic support measures, 2003-07 
(Dram million) 
 2003 2004 2005 2006 2007 
Green Box      
General services      
Research 53 75 57 155 166 
Pest and disease control 1,223 1,308 1,175 1,537 2,275 
Extension and training services 202 191 296 445 389 
Inspection services 42 11 14 14 14 
Marketing and promotion services 1,042 3,805 25 4,033 4,642 
Infrastructure 3,918 3,304 550 896 1,162 
Public stockholding for food security 0 0 695 0 0 
Direct payments      
Disaster relief 1,023 330 343 594 0 
Structural adjustment assistance 564 0 0 0 0 
Amber Box      
Non-product-specific      
Assistance to land users up to 7 ha.a 0 0 0 0 166 
Assistance for nitrogen fer tilizer acquisition 0 0 0 0 150 
Total domestic support 8,068 9,025 3,154 7,674 8,964 
a WTO document G/AG/N/ARM/16, 4 July 2008, refers to assistance to  land users of up to 7 "acres ".  The Armenian authorities 
 confirmed that this should read "hectares". 
Source:    WTO documents G/AG/N/ARM/2, 14 April 2004;  G/AG/N/ARM/5/Rev.2, 4 Augus t 2006;  G/AG/N/ARM/9 and 
 Corr.1, 4 August 2006 and 2 November 2006;  G/ AG/N/ARM/12, 11 June 2007;   and G/AG/N/ARM/16, 
 4 July 2008. 
11. The Ministry of Agriculture is also responsible  for the agriculture extension service, which 
operates through ten support centres.  Until 2005, f unding for the service was provided by the World 
Bank's Agricultural Reform Support Project (ARSP).6  Since then the State budget has provided for 
the support centres. 
12. In 2002, it was reported that the absence of an  overall strategy for agriculture development 
was Armenia's most serious agriculture policy problem.7  Since then, the Strategy for Sustainable 
Development of the Agriculture Sector was approve d by Resolution No. 682-N in April 2004, and the 
Strategy for Sustainable Development of Agri culture was approved by Resolution No. 826-N in 
November 2006.  The main objectives of these stra tegies are to:  achieve sustainable agricultural 
development;  improve food security;  and incr ease rural incomes.  These objectives are to be 
achieved by:  increasing production and profitability;  making more efficient use of factors of 
production;  improving food safety;  and improving rural infrastructure.8  The next review of 
agriculture policy will take place in 2010. 
(2) MINING  
13. Mining is an important part of Armenia's ec onomy.  It accounted for 2.6% of GDP in 2006 
(latest year available), and 26% of exports (inc luding re-exports) in 2008.  Significant deposits of 
molybdenum, copper, and gold are present along with sm aller deposits of lead, silver, and zinc.  In 
                                                      
6 World Bank online information, "Agricultural Reform Support Project".   Viewed at: 
http://web.worldbank.org/external/projects/main ?pagePK=64283627&piPK=73230&theSitePK=40941&menuP
K=228424&Projectid=P035806 [July 2009]. 
7 Kernan et al. (2002). 
8 Information provided by the Armenian authorities;  and World Bank (2007). WT/TPR/S/228 Trade Policy Review 
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addition, there are commercial deposits of industr ial minerals including basalt, diatomite, granite, 
gypsum, limestone, and perlite (Table VI.4).  All mineral deposits belong to the State, which has the 
power to grant investigation, prospecting, and exploitation licences. 
Table VI.4 
Production of mineral commodities, 2001-07 
 Units 2001 2002 2003 2004 2005 2006 2007 
M e t a l s          
Copper         
Concentrate Cu content tonnes 16,460 16,641 18,068 17,700 16,256 15,000 .. 
Blister, smelter, primary tonnes 4,000 6,700 7,500 7,500 9,881 8,791 .. 
Gold, Au content kg 1,900 3,200 1,800 2,100 1,400 1,400 .. 
Molybdenum, concentrate, Mo content tonnes 2,943 2,884 2,763 2,950 3,030 4,098 .. 
Rhenium kg 750 800 1,000 1,000 1,200 1,000 .. 
Silver kg 3,000 5,500 4,000 4,000 4,000 4,000 .. 
Zinc, concentrate, Zn conten t tonnes 745 782 2,056 1,927 3,196 2,270 .. 
Industrial minerals         
Caustic soda tonnes 4,900 3,600 1,800 2,800 6,200 6,500 .. 
Cement '000 tonnes 300 355 384 501 605 625 722 
Clays, bentonite, powder tonnes 1,000 258 642 700 732 720 .. 
Gypsum tonnes 12,800 44,900 57,800 51,400 44,200 43,700 54,600 
Limestone '000 tonnes 11,900 12,500 13,000 16,000 17,000 17,000 .. 
Perlite tonnes 35,000 35, 000 35,000 35,000 35,000 35,000 .. 
Salt tonnes 30,300 30,300 31,900 31,600 34,700 37,000 .. 
.. Not available. 
Source:    U.S. Geological Survey (2007), Minerals Yearbook 2006:  Commonwealth of Independent States , Volume III.  
 Viewed at:  http://minerals.usgs.gov/minerals/pubs /country/2006/myb3-2006-am-aj-bo-gg-kz-kg-md-rs-ti-tx-up-
 uz.xls;  and National St atistical Service of the Republic of Armenia (2008), Statistical Yearbook of Armenia .  
 Viewed at:  http://www. armstat.am/en/?nid=45. 
14. In 2005 there were 17 mining and metallurgical enterprises operating in Armenia.  In addition 
to extracting minerals, Armenia produces aluminium foil and has an important diamond-processing industry, both based on imported raw materials.  RUSAL of Russia owns the aluminium foil plant, Armenal, and has invested over US$100 million in the plant over the past few years.  Production 
capacity is about 25,000 tonnes of foil per year, which is equivalent to about 12% of all foil produced 
in the CIS countries.  There are also significant e xports of iron and steel, which were reported as 
either transhipments or scrap as there is no domestic steel industry.
9 
15. Armenia was a major producer of minerals in the Soviet Union.  However, for a number of 
years after independence, production effectively halt ed as a result of the Arme nian energy crises and 
economic instability.  With the economic reform s of the mid 1990s, production resumed and the 
Government started to privatize all mining comp anies, a process that was essentially completed in 
2004.  The decline in minerals prices in internati onal markets in 2008 led to a decline in production in 
Armenia.  However, as prices recovered, Armeni a resumed expansion of pr oduction and exports of 
minerals in 2009.   
16. Several foreign enterprises have invested in the mining sector in Armenia.  A consortium of 
companies led by Cronimet of Germany took ove r the Zangezur copper-molybdenum plant and has 
invested US$200 million in improving facilities.  Production is expected to reach 18,000 tonnes of 
copper and 4,000 tonnes of molybdenum concentr ates annually.  The Kaja ran copper-molybdenum 
                                                      
9 Levine and Wallace (2007).  Armenia WT/TPR/S/228
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mine was privatized in December 2004 and ore-pr ocessing had increased to about 12.5 million tonnes 
in 2008.  The United States-based Comsup Commod ities purchased the Agarak Cu-Mo plant in 2003 
and is reported to have invested US$3.5 million in 2004-05.  The Armenian Copper Programme 
(ACP), a private Armenian copper mining and smelting enterprise, is evaluating the Teghout 
copper-molybdenum deposit.  The ACP also owns and operates the Alaverdi smelter, the largest in the 
region, which produces up to 10,000 tonnes of bliste r copper from concentrate.  Several companies 
are developing other copper, molybdenum, gold, zinc, and other mineral deposits in Armenia.10 
17. A number of problems confront the mining sector.  In particular, transport cost are high 
because most production is located in the south and ca rried overland, via Georgia, to Black Sea ports 
for export.  Poor mineral recovery rates and e nvironmental issues related to mining were also a 
problem according to a 2003 ECE report.11  However, the authorities noted that since 2001, nature-use 
charges in Armenia have increased from dram 322.2 million to dram 3,986.3 million in 2008.  In addition, since 2005, based on the terms of their mining licences, mining companies have begun transfers to the Special Environment Protection fund for the recultivation of land damaged by mining activities.  At end-October 2009, total transfers stood at dram 271.5 million.  Transport costs are also 
being addressed through the North-South Road Corridor Investment Program, which will cross 
Armenia from south to north then through Georgi a to Poti and Batumi on the Black Sea.  The 
Program's supporters include the Asian Development Bank.
12  
18. The Ministry of Energy and Nature Resources is responsible for regulating the mining sector, 
including:  issuing licenses; and monitoring explora tion and production.  Environmental controls are 
the responsibility of the Ministry of Nature Protection.  Armenia's mining sector is regulated by the 
Subsoil Code and the Law on Concessions of 2003 pl us subsequent amendments and implementation 
regulations.13  The authorities noted that, with a view to improving conditions for exploration and 
exploitation of minerals, they are elaborating a new Subsoil Code, which will replace the current 
Subsoil Code and the Law on Concessions. 
19. The current Concession Law makes provision for various types of prospecting and mining 
licences, which may not be sold but may be transferred with the approval of the Ministry of Energy 
and Nature Resources.   
20. Between 2004 and 2009, 680 inv estigation licences and 600 mining licences were granted.  
Licence fees depend on the type of licence and the mine ral being exploited.  On average investigation 
licences cost dram 50,000 per year while exploitation licences are dram 10 million per year for 
metals, dram 1 million per year for non-precious stones, and dram 500,000 per year for non-metallic 
mining. 
21. According to the authorities, there are no rest rictions on foreign enterprises obtaining licences 
for exploration or mining.  They pointed out that the mining regulations are meant to attract foreign investment and that there has been considerab le investment in the sector from abroad.   
                                                     
 
10 Mbendi Information Services online information, "Copper Mining in Armenia:  
Copper-Molybdenum Mining".  Viewed at:  http://w ww.mbendi.com/indy/ming/ cppr/as/am/p0005.htm#5 
[August 2009]. 
11 United Nations Economic Commission for Europe (2003). 
12 Asian Development Bank online information, "42145: North-South Road Corridor Investment 
Program" .  Viewed at:  http://www.adb.org/Proj ects/project.asp?id=4 2145 [December 2009] 
13 The full title of the legislation is "The Law on Co ncession of Subsurface for Purposes of Mineral 
Prospecting and Mining". WT/TPR/S/228 Trade Policy Review 
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22. Armenia introduced a tax on the exploitation of na tural resources in 1999 at 1.5% of turnover 
for gold, silver, and platinum;  1.3% for copper a nd molybdenum;  1.0% for lead and zinc;  and 6% 
for precious stones.14  This was amended in the Concessions Law of 2003 to a variable royalty which 
depends on the profitability of the enterprise.  The b asic royalty is set at 1% of sales.  An additional 
royalty is levied once profitability (revenue less co sts) exceeds 25% of total revenue.  The additional 
royalty is levied at an incremental rate of 0.1% up to a maximum additional royalty of 0.8%.15 
(3) ENERGY  
(i) Overview 
23. The only domestically produced primary energy in Armenia is electricity from hydroelectric 
plants.  Out of a total annual primary energy suppl y of 2,586 thousand tonnes of oil equivalent (ktoe), 
1,372 ktoe are from natural gas, 688 ktoe are fro m nuclear power, 394 ktoe from petroleum products, 
157 ktoe from hydro electricity plants, and 1 kt oe from renewable sources.  Although Armenia 
imports nearly all its primary energy needs, it is a net exporter of electricity, with net exports of 
27 ktoe.16 
24. The Medzamor Nuclear Power Plant (NPP) uses fuel imported from Russia.  Armenia has no 
oil or gas production or any oil refineries.  Althoug h the country has not been systematically explored 
for hydrocarbon deposits, efforts over the past 50 y ears or so have not resulted in any commercial 
finds.  There are some coal fields and shale oil deposits in various locations but it is not clear whether any are commercially viable, and as of  end-2009, none are being exploited.
17  Import tariffs on 
electricity, coal and petroleum products are bound at 5% (all products in HS chapter 27) in Armenia's 
Schedule but the applied tariffs were zero in early 2009.   
25. Before independence, Armenia received its energy  supplies, including all gas, oil, and nuclear 
fuel, from Russia and Turkmenistan and, until 1979, Ira n.  The electricity system was operated jointly 
with Georgia and Azerbaijan.  The situation change d radically in the late 1980s and early 1990s.  The 
Medzamor NPP, commissioned in the late 1970s, was shut down in 1989 due to concerns with 
seismic vulnerability following the earthquake in 1988.18  Gas supplies arriving via Azerbaijan 
stopped in 1991.  As a result of the turmoil of the early 1990s energy supply fell by 83% between 
1991 and 1994.  To address the energy crises, one of  the two units of the Medzamor nuclear power 
plant was re-opened in 1995 fo llowing extensive improvements.19  Gas supplies via Georgia replaced 
those that came via Azerbaijan. 
26. The Ministry of Energy and Natural Resources is  responsible for energy policy.  The legal 
framework for the energy sector is set out in th e Energy Law of 1997, as amended, and the Law on 
Energy Saving and Renewable Energy of 2004.  Pub lic policy is also set out in the Energy Sector 
                                                      
14 Mbendi Information Services online information, "Mining in Armenia:  Overview" .  Viewed at: 
http://www.mbendi.com/indy/ming/ as/am/p0005.htm [August 2009]. 
15 Mining Journal , "Armenia",  Special publication, November 2005.  Viewed at:  
http://www.infomine.co m/publications/docs/MiningJournal Nov2005.pdf [A ugust 2009]. 
16 Information provided by the Armenian authorities;  and International Energy Agency online 
information, "2006 Energy Balance for Armenia".  Viewed at:  http://www.iea.org/stats/ 
balancetable.asp?COUNTRY_CODE=AM. 
17 Lynch (2002). 
18 World Nuclear Association online information, "Nuclear Power in Arme nia".  Viewed at:  
http://www.world-nuclear .org/info/inf113.html [September 2009]. 
19 International Energy Agency in co-operation with the Energy Charte r Secretariat (2000). Armenia WT/TPR/S/228
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Development Strategy adopted by the Government of Armenia in 2005.20  The main objectives set out 
in the Strategy paper include to:   
− provide reliable energy supply at low cost to all customers;   
− improve energy conservation;   
− avoid energy import sources that threaten the security and economy of Armenia;   
− ensure the safe operation of the nuclear power pl ant to 2016 or such time as it can be replaced 
and decommissioned without unacceptable economic, ecological, and energy security impact;  
and  
− ensure an ecologically and financia lly sustainable energy supply.   
27. Public policy for energy generally, and electricity  in particular, has been further developed in 
the Least-Cost Generation Plan for 2006, and a ne w energy programme approved by the Government 
in 2007.  The 2006 Plan focussed on:  improving safety at the Medzamor NPP and decommissioning it by 2016;  construction of a new nuclear power pl ant;  and energy conservation and the development 
of renewable energy.  In addition, the plan emphasi zed projects to minimize the costs to consumers of 
decommissioning Medzamor.
21  
28. Armenia is a partner in the EU INOGATE en ergy programme between the EU, the littoral 
states of the Black and Caspian seas and their neighbouring countries.  The objectives of the programme are to:  work towards converging energy markets on the basis of the EU's internal energy 
market;  enhance energy security;  support sustaina ble energy development;  and attract investment.
22  
(ii) Electricity 
29. Armenia has installed electrical capacity of about 3,149 MW, of which 2,420 MW is 
available, while peak loads were about 1,204 MW in 2008.  However, much of the capacity is old and inefficient.  Some of it needs to be replaced and much of it needs to be upgraded.  The total capacity 
of the thermal power plants (TPP) is 1,75 4 MW, provided by Hrazdan TPP and Yerevan TPP.  
Hydroelectric power is similarly concentrated:  out of a total installed capacity of about 960 MW most 
is supplied by the Sevan-Hradzdan Cascade and th e Vorotan Cascade.  All electricity from nuclear 
power is provided by the Medzamor nuclear power  plant with an installed capacity of 407.5 MW 
(from Unit 2;  Unit 1 is not operational) (Table VI.5).
23   
30. Considerable investment is taking place in th e electricity sector.  Construction of a new 
250 MW combined-cycle energy unit on the Yerevan TPP started in July 2008 with the assistance of a 
loan from the Japan Bank for International Co-opera tion, and construction is under way on a 450 MW 
gas-steam thermal unit on Hrazdan.  Similarly, invest ment in transmission to help trade in electricity 
is taking place with a 400 kV line between Armenia and Georgia, and a 400 kV line between Armenia 
and Iran. 
                                                      
20 Government of Armenia (2005).  
21 Ministry of Energy (2006). 
22 For more information, see INOGATE online info rmation.  Viewed at:  http://www.inogate.org/ 
[September 2009]. 
23 Government of Armenia (2005).   Figures update d by the Armenian authorities in November 2009. WT/TPR/S/228 Trade Policy Review 
Page 64 
 
 
Table VI.5 
Main electricity plants, 2009 
Power plant Type Owner Main stockholders Installed capacity 
(MW) 
Hrazdan  Thermal (natural 
gas and oil) Hrazdan Energy Company 
(RazTES) OJSC Wholly owned by the Federal Agency for Management of 
Federal Property of the Russian Federation 1,110 
Yerevan Thermal (natural 
gas and oil) Yerevan Thermal Power Plant 
CJSC .. 550 
Sevan-Hrazdan Cascade  Hydro International Energy Corporation 
CJSC InterRAO UES is a wholly 
owned subsidiary of RAO UES 
Russia 559  
Vorotan Cascade Hydro Vorotan Complex of HPP CJSC State owned 404 
Medzamor Nuclear  State owned financial 
management by InterRAO UES  InterRAO UES is a wholly 
owned subsidiary of RAO UES 
Russia 407 
Dzorhek Hydro Ministry of Defence State owned 27 
Small hydroelectric plants Hydro Private ownerships Private owners 89 
Lori-1 Wind High-voltage Electricity Network 
CJSC State owned 3 
Total n.a. n.a. n.a. 3,149 
.. Not available. 
n.a. Not applicable. 
Source:    Hrazdan Energy Company online information.  Viewed at:  http://www. raztes.am/eng/inde x.htm;  Yerevan 
Thermal Power Plant Cjsc online information.  Viewed at: http://yerevantpp.com/hom;  NTI online information, 
"Armenia Profile:  Nuclear facilities" :  Viewed at: http://www.nti.org/e_research/profiles/Armenia/Nuclear/ 
facilities_metsamor.html;  and information provided by the Armenian authorities. 
31. Armenia has considerable potential to produce more electricity from renewable resources.  
There are 70 small hydroelectric plants operating with an installed capacity of 89 MW;  in 
January 2009, building licences were issued for 64,  and more are foreseen, along with several major 
plants.  Armenia also has the first wind plant in th e Trans-Caucasus region, the Lori-1 power plant;  a 
second, the Iran-Armenia Wind Farm, is under cons truction.  There are also opportunities for 
electricity production from solar and geothermal po wer sources.  Initial geological and geophysical 
exploration in Jermaghbyur has been promising a nd drilling works are expected to start in 2010. 
32. In 2002, all distribution companies were merged  into a single entity, the Electricity Network 
of Armenia (ENA), which was privatized that same year with ownership passing to a British 
offshore-registered enterprise, Midland Resources Holding Ltd.   In September 2005, the Armenian 
Government authorized Midland Resources to dispo se of its stake.  The current owner of ENA is 
InterRAO UES of Russia.24  
33. The Public Services Regulatory Commission (PSRC) is responsible for setting the price of 
utilities (electricity, natural gas, thermal energy, wa ter, and electronic communications) in Armenia.  
In April 2009, for the first time in 11 years, it in creased the average tariff for all customer groups for 
electricity by an average of 24.4%.  The tariffs  vary from dram 17 per kW h for 35 kV connections 
night-time rate to dram 30 per kWh fo r residential customers (including VAT).25  It also approved 
price increases for natural gas and water.   
34. The PSRC is also responsible for setting the price for sales by the generators of electricity to 
the distribution company.  To encourage production, purchase of electricity produced by renewable 
                                                      
24 Press Release, "EBRD and Vnesheconombank join forces to support Armenia's energy network", 
European Bank for Reconstruction and Development, 17 June 2009. 
25 For more details, see the PSRC online informa tion.  Viewed at:  http://www.psrc.am/en/. Armenia WT/TPR/S/228
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sources (small hydropower plants, wind, and biomass plants) at preferential tariffs rates is mandatory 
for distributors.  The rates, including VAT, are:  dram 37.66 per kWh for wind;  dram 39.36 per kWh for biomass from biomass plants;  dram 20.55 per kWh for small hydro plants  constructed on natural 
water flows;  dram 13.7 per kWh for hydro plan ts constructed on the irrigation system;  and 
dram 9.13 per kWh for small hydro plants constructed on drinking-wate r pipes.  A licence, issued by 
the PSRC, is required to import or export electricity  and natural gas.  The PSRC also issues licences 
for generation, transmission, and distribution of  electricity and thermal power, transport and 
distribution of natural gas;  calcu lates and approves payments for usage of the railway infrastructure; 
sets tariffs for universal post services;  and sets tariffs  for mandatory technical supervision of transport 
vehicles.  
(iii) Gas 
35. Armenia has an underground natural gas storage facility, which is used for energy security 
and seasonal adjustment of gas flows.  The sole gas distribution and transmission company, ArmRosGasprom CJSC (ARG), is 80% owned by Russia's Gazprom and 20% by the Government of 
Armenia through the Ministry of Energy and Natural Resources.  All natural gas used in Armenia is 
imported from Russia through Georgia.  ARG buys the gas from Gazprom at a price of US$154 per 
1,000 m
3, which was fixed in April 2009 until April 2 010 when a new agreement will be negotiated. 
36. Construction of a 720 mm natural gas pipeline between Iran and Armenia was completed in 
December 2008.  ARG intends to purchase the pipe line.  ARG is also investing in electricity 
generation through the rehabilitati on and modernization of the 5th unit of the Hrazdan TPP, which is 
under construction.   
37. The PSRC sets the retail price for gas;  this is currently at US$215 per 1,000 m3 for customers 
that use 10,000 m3 per month or more and dram 96 per m3 for other users (including VAT in both 
cases). 
(iv) Urban heating 
38. In the Soviet era Armenia had extensive urban di strict heating systems.  However, with the 
crises of the early 1990s coverage collapsed from 35% of urban residential areas in 1989 to 10% in 
2003 and has not been rebuilt.26  To a large extent, the urban heating system is being replaced 
indirectly by the expansion of the gas distribution system, while the Government is also implementing 
a 2002 Urban Heating Strategy based on gas-based heating and distributed heat.   
39. On 13 April 2006 the Government adopted Decision No. 609-N "The Principal Projects on 
Rehabilitation of Power and Thermal Supply by Utiliza tion of Combined Systems".  Official policy is 
to encourage rehabilitation of existing urban heating sy stems, where this is viable, and construction of 
new systems.  Encouragement is through the dere gulation of small systems;  no licences are needed 
and tariffs are not regulated.  For larger units, the policy is also intended to encourage supply 
contracts with housing complexes;  although these complexes generally have limited capability to 
assume payments and liabilities on behalf of occupants. 
(v) Transport fuel 
40. Practically all oil products are imported into Ar menia by rail through Ge orgia;  small amounts 
also arrive by truck.  The PSRC does not set prices for petrol or diesel.  The import and distribution of 
transport fuel is concentrated, with only seven ente rprises operating in the petrol market in 2006:  the 
                                                      
26 Asian Development Bank (2006). WT/TPR/S/228 Trade Policy Review 
Page 66 
 
 
top two had 84.5% market share of petrol sales a nd are classed as having dominant positions based on 
the Law of Protection of Economic Competition.27  In addition, the sector was identified by the State 
Commission for Protection of Economic Competition as being subject to fixed price changes.28 
(4) SERVICES  
(i) Main features 
41. The relative economic importance of Armenia's services sector increased from 59.2% of GDP 
in 2003 to 72.7% in 2008.  This expansion was driv en largely by construction services, and wholesale 
and retail trade.  Trade in services has also expande d rapidly.  Services exports increased by a nominal 
average of almost 26% per year over 2003-08, and services imports by around 29%.29   
42. Armenia undertook sector-specific commitments in 11 of 12 sectors, or 97 of the 
160 subsectors in the Services Sectoral  Classification List (Table AVI.1).30  Important exceptions are 
postal services, and transportation of passengers a nd freight via air and rail.  Market access and 
national treatment were left unbound with respect to  the presence of natural persons, except for the 
temporary entry of persons covered in Armenia's horizontal commitments. 
43. Armenia's list of GATS Article II MFN ex emptions covers freight and passenger 
transportation by road, and audiovisual services re lated to the production and distribution of motion 
pictures and television programmes.  All these measures are intended for an indefinite duration, 
except for audiovisual services regulated by bilatera l agreements with a pre-determined duration.  
44. Armenia bound some limitations to legal, te lecommunications, financ ial, and transport 
services in its GATS Schedule of Commitments (see related sections below).  Nonetheless, Armenia's 
existing legal framework is in most cases (e.g. po stal services, telecommunication and financial 
services) more liberal than its GATS commitments.   
45. Armenia has not submitted an offer in the current services negotiations.   
(ii) Financial services 
(a) Market structure 
46. Despite significant developments during the re view period, Armenia's financial system 
continues to be small, and fina ncial intermediation continues to be considerably below the CIS 
average.31  In December 2008, the ratio of the financia l sector's total assets to GDP was 30.2%;  93% 
of these assets were held by commercial banks, 6%  by credit organizations , and 1% by insurance 
companies.32  Total banking assets grew at a rate of 29% per year during 2003-08.  The sector 
contributed 3.5% to Armenia's GDP and employed 0.9% of the workforce in 2008.33   
                                                      
27 State Commission for the Protection of Economic Competition of the Republic of Armenia (2006c). 
28 State Commission for the Protection of Economic Competition of the Republic of Armenia (2006b).  
29 National Statistical Service of Armenia online info rmation.  Viewed at:  http://www.armstat.am/en. 
30 WTO document WT/ACC/ARM/ 23/Add.2, 6 December 2002. 
31 IMF online information, "International Financial Statistics".  Viewed at:  
http://www.imfstatistics.org/imf/. 
32 Central Bank of Armenia online information, "Publications:  Periodicals".  Viewed at:   
http://www.cba.am/CBA_SITE/publicatio ns/periodicals.html?__locale=en;   and National Statistical Service 
online information, "Time series".  Viewed at:  and http://www.armstat.am/en/?nid=126&id=01001&year= 
2008&submit=Search. 
33 National Statistical Service of the Republic of Armenia (2009). Armenia WT/TPR/S/228
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47. From the mid 1990s until 2002, numerous banks  were liquidated and the banking sector 
underwent considerable consolidation.  In 200 8, there were 22 commercial banks, 25 credit 
organizations, and 11 insurance companies functioning in Armenia.  The concentration in the banking 
sector is relatively low as measured by the Herfindahl-Hirschman Index.34  There were approximately 
118 bank branches per million inhabitants in 2008.  There is no State ownership in banking or 
insurance.  The insurance sector is  small if measured by the ratios of the value of total assets and total 
premiums to GDP, which were 0.3% and 0.2%, respectively, in 2008. 
48. The financial sector seems to be sound, with re latively high capitalization, profitability, and 
liquidity;  according to the authorities, regular stress  testing also indicates its stability.  Nevertheless, 
the IMF warned that the acceleration of growth in bank deposits and credit may contribute to higher 
credit risk, and recommends improvement of cor porate governance and strengthening of the deposit 
guarantee fund created in 2006 (see below).35   
49. There is no significant provision of offshore financial services.  
(b) Regulatory framework 
50. The Central Bank of Armenia (CBA) is responsib le for monetary policy (Chapter I(2)), and 
regulation and supervision of the entire financial system.36  In 2006, the CBA took over responsibility 
for the regulation and supervision of insurance companies from the Insura nce Inspectorate, and 
responsibility for the supervision of the securities markets from the Securiti es Commission.  The CBA 
is responsible for the stability, liquidity, and solvency of the banking system, as well as the functioning of the payment and settlement systems.  Moreover, by law only the CBA has the authority 
to issue regulations and grant licences for the operation of financial in stitutions (see below).
37   
51. Concentration in the banking sector is monitored by the CBA, and a new Division on 
Competition Analysis was created within the CBA in 2009.  However, the CBA continues only to 
provide support and to exchange  information with Armenia's Competition Commission, which is 
legally responsible for anti-competitive practices and othe r competition policy issues (Chapter V(4)).      
52. Armenia has made substantial market access and national treatment commitments on financial 
services under the GATS (Table AVI.1).  The three mo st important restrictions concern:  (i) the 
cross-border supply of insurance services (excluding those applied to marine and aviation transport), 
which was left unbound;  (ii) the prohibition on branches of non-resident banks to accept deposits 
from Armenian nationals;  and (iii) the reservation of settlement and clearing services for securities to Armenia's state-owned central depositary.  The latte r two are not applied in practice (see below). 
53. The CBA has signed memoranda of understa nding concerning banking services with Cyprus, 
Georgia, Iran, the Russian Federation, and Ukraine.  
                                                     
 
34 The Herfindahl-Hirschman Index (HHI) is a measure of the size of firms (not  necessarily banks) in 
relation to the industry as well as an  indicator of the amount of competition among them.  Calculations of HHI 
for the Armenian banking sector are available in Central Bank of Armenia (2008), and IMF (2006). 
35 IMF (2009b). 
36 Law on Introducing Consolidated Financial Regulation and Supervision of 8 December 2005. 
37 Central Bank of Armenia online information, "Legal Acts:  Introduction".  Viewed at:  
http://www.cba.am/CBA_SITE/legal/index.html?__locale=en. WT/TPR/S/228 Trade Policy Review 
Page 68 
 
 
Banking 
54. Since its accession to the WTO in 2003, Armenia has taken steps to improve confidence in, 
and the stability of its banking sector.  Amongst other things, it has modernized its legislation, created 
a deposit guarantee scheme, and raised minimum capita l requirements.  In order to harmonize its 
legislation with EC Directives and bring it into co nformity with Basel II principles, new regulations 
have been issued and laws, such as the Law on Ba nkruptcy of Banks and Credit Institutions of 1996, 
have been amended.  A deposit guarantee fund, based on mandatory quarterly contributions by all 
banks operating in Armenia (irrespective of the origin  of capital), was created in 2004;  local-currency 
deposits are guaranteed up to dr am 2 million (some US$5,715), while  foreign-currency deposits are 
guaranteed only up to dram 1 million.38  In 2007, the CBA issued new regulation on banks' prudential 
standards that gradually raised the minimum total capital for a bank (new or already established) to 
dram 5 billion (some US$14.3 m illion) as of 1 January 2009.39 
55. Bank licensing is a three-stage process:  (i) the interested party requests a licence, submitting 
a set of documents to the CBA, including a three-ye ar business plan;  (ii) if all required documents 
have been submitted and reflect credible informa tion, the CBA registers the bank or foreign bank 
subsidiary40;  and (iii) a bank will be granted a licence w ithin one year after registration, provided it 
has paid the minimum total capital and has complied with other legally specified requirements.  The 
law does not provide for any discriminatory treatment  between national and foreign applicants.  The 
holder of a bank licence is permitted to provi de any financial service, except insurance.41  
56. There are no ownership restrictions for the par ticipation of foreign banks and other foreign 
investors in Armenia's banking sector.  According to  the legislation, foreign banks are allowed to 
establish a subsidiary, a branch or a representative of fice.  However, the authorities noted that there 
are no foreign bank branches in Armenia.  Subsidia ries of foreign banks are allowed to provide the 
same types of services as domestically owned ba nks.  Contrary to Armenia's GATS commitments, 
branches of foreign banks are allowed to accept depos its from Armenian nationals;  in which case, the 
CBA may set additional prudential requirements.  Approximately 70% of the total capital of the 
banking system is owned by foreigners.42  As confidence in Armenian banks was impaired in the 
recent past, due to connected lending and mismanagem ent, foreign ownership is seen as a conveyor of 
confidence in the system.43  
57. In practice, there are no restrictions on th e provision of cross-bor der banking services.  
Domestically established banks and corporations, as well as retail consumers, are allowed to borrow 
from and deposit with foreign banks located abroad.  The only practical requirement is for foreign 
banks to obtain a licence with the CBA in order to provide cross-border services that involve the 
establishment of a bank branch in Armenia.  In June 2009, domestically  established financial 
institutions had a total of US$327 million in deposits and US$507 in debt with foreign banks abroad.  
Likewise, at the same date, the private sector had a relatively large (U S$515 million) outstanding 
liability with foreign banks located abroad.  
                                                      
38 Law on Guarantee of Remuneration of Bank Deposits of Physical Persons of November 2004.  The 
authorities indicate that an amendment is under discussion in the National Assembly to increase the value of 
guaranteed deposits to dram 4 million and dram 2 million, respectively.  
39 CBA Regulation No. 2/39-N of 9 February of 2007. 
40 As defined by the Basel Committee (Bank for International Settlements, 1983). 
41 Law on Banks and Banking of 30 June 1996, as amended. 
42 Information provided by the Armenian authorities. 
43 Grigorian (2003). Armenia WT/TPR/S/228
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58. Banks are not allowed to provide insurance ser vices, except for insura nce agent services, and 
vice versa.  Nevertheless, a holding company may own both a bank and an insurance company.   
Insurance 
59. In 2008-09, the National Assembly introduced  amendments to the Law on Insurance and 
Insurance Activities of May 2007, which itself ha d replaced the Law on Insurance of 2004.  During 
the review period, the CBA, which was empowered  to supervise the insurance sector as of 
January 2006 (see above), issued new regulations concerning insurance activities, most importantly 
Regulation No. 3/01 of 30 October 2007.44  This Regulation harmonizes the licensing procedures with 
those applied to other financial organizations (i .e. banks and credit organizations) and with the 
European standards of licensing. 
60. The documents required by the CBA for regist ration and licensing are different for foreign 
and domestic insurance companies.  Nevertheless, the objectives of the licensing process seem to be 
the same.  To a large extent, the CBA relies on info rmation provided by the supervisory authority in 
the foreign company's home country.  All applicati ons must be reviewed by the CBA within 30 days 
of submission. 
61. Insurance licences may be issued for one or sever al classes of insurance activity defined in 
Article 7 of the Law.  However, the same insurance company cannot provide life and non-life insurance simultaneously.  The same investor, ho wever, may obtain two separate licences for two 
separate insurance companies in order to provide life and non-life insurance.  A reinsurance company 
may be simultaneously engaged in reinsurance of life and non-life insurance. 
62. There are no foreign ownership restrictions in  the provision of insurance services.  Foreign 
insurance companies are allowed to establish s ubsidiaries, branches or representative offices in 
Armenia.  Foreign ownership in insuran ce companies was 63% at end-September 2009.
45  There are 
no restrictions specific to foreign insurance compan ies, except those applied to representative offices:  
i.e. foreign insurance companies (and only those from WTO Member countries) may only provide cross-border supply of insurance services that cove r maritime shipping, civil aviation, spaceship 
launching (including satellites), international freight carriage, and reinsurance risks.
46  
63. Insurance intermediaries require a licence/pe rmission and may only engage in insurance 
intermediation with licensed insurance companies.   Only legal entities may apply for a licence to 
provide insurance brokerage services, while lega l entities or natural pers ons may both apply for 
permission and registration as insurance agents.  Pr ofessional qualification requ irements apply to both 
national and foreign applicants, but there are no nati onality restrictions for the provision of insurance 
intermediation activities.  
Securities 
64. Capital markets are still very small in Armenia.  In 2008, the total value of transactions 
conducted in the securities markets totalled dram 821 billion (some US$2.4 billion), of which 96.8% 
were government securities, 2% were equities, and 1.2% were corporate bonds.  The legislation 
currently applied is more liberal than Armenia's GATS commitments related to securities.  Armenia's 
                                                      
44 Central Bank of Armenia online information, "Legal Acts:  Regulations".  Viewed at:  
http://www.cba.am/CBA_SITE/le gal/akter.html?__locale=en. 
45 Information provided by the Armenian authorities. 
46 Article 2 of the Law on Insurance and Insurance Activities of 2007, as amended. WT/TPR/S/228 Trade Policy Review 
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central depositary and stock exchange were demutualized47 in 2007, subsequently privatized to the 
NASDAQ OMX Group in 2008, and since January  2009 operates under the name NASDAQ OMX 
Armenia.48 
(iii) Telecommunications 
(a) Market structure 
65. The Armenian telecommunications sector is still at  a developing stage, mainly due to lack of 
investment during 1998-05.  Although the tel ecom market was fully liberalized in 2007, new 
investments in the sector are still needed, as the inade quate quality of services, particularly of internet 
access, may be hindering business innovati on and general economic development.  
66. In 1998, ArmenTel, at that time Armenia's onl y telecom company, was partially privatized 
and granted a monopoly licence covering all teleco m services for 15 years.  Since then, the 
Government has imposed a series of fines on ArmenT el for its abuse of dominant position and for the 
poor quality of its services (see below).  In 2004, the Government renegotiated ArmenTel's licence, 
ending its monopoly in mobile telephony and internet access services.  In 2005, a second mobile 
telephony licence (GSM) was granted to an Armenian  company, which was subsequently sold to a 
Russian operator branded as VivaCell.  In 2006, the State sold its remaining stake in ArmenTel to 
another Russian company branded as Beeline, whic h also acquired control over the rest of the 
company.  In 2007, the Government eliminated th e remaining exclusive right s enjoyed by Armentel 
on fixed telephony and inte rnational voice and data transmissi on services (by the end of 2009 there 
were three providers of international IP service s and eight providers of voice services over fixed 
lines).  In 2009, the Government granted a third mobile telephony licence (also GSM) to a French 
company branded as Orange.  When VivaCell entere d the mobile services market prices dropped and 
the quality of services increased, the same was expe cted to happen when Orange began its operation 
in November 2009.    
67. In 2008, telecommunications contributed 5% to Armenia's GDP.  Between January 2003 and 
December 2008, the number of fixed telephone lin es increased by around 8%, reaching a penetration 
rate of 20%.  During the same period mobile subscrip tions increased at an average annual rate of 44%, 
reaching penetration rate of 73% of  inhabitants at the end of 2008.  The authorities indicate that 
internet subscriptions have increased since liberalizat ion of the market, reaching a total of 80,141;  but 
there are no official statistics on the number of internet users.   
(b) Regulatory framework  
68. Armenia's GATS Schedule of Commitments cove rs virtually all basic and value-added 
services, for which it has agreed, with a few excepti ons (i.e. reservations of monopoly rights), to 
impose no limitations on market access or national treatment for the first three modes of supply (Table AVI.1).  The GATS Schedule incorp orates, under additional commitments, the 
telecommunications Reference Paper negotiated in the context of the extended negotiations.
49  
69. The Ministry of Transport and Communications is responsible for establishing policy for the 
telecom sector, while the Public Services Regul atory Commission (PSRC), an independent State 
                                                      
47 When the owners of a mutual company convert thei r rights into shares and become shareholders of 
the new company.  
48 For more information, see NASDAQ OMX Ar menia online information.  Viewed at:  
http://www.nasdaqomx.am/en/index.htm. 
49 WTO document WT/ACC/ARM/ 23/Add.2, 6 December 2002. Armenia WT/TPR/S/228
 Page 71 
 
 
body, is responsible for supervisi on and regulation.  The authorities note, however, that the division of 
tasks between the two entities is not always clear.  The PSRC consists of five members appointed by 
the President (upon nomination by the Prime Ministe r) for five years.  Its funding must be approved 
by the Government but it should rely on ob ligatory fees collected by regulated entities.50  The PSRC 
regulates the sector through Resolutions, which ar e in most cases only available in Armenian.51  
70. The Law on Electronic Communications of 8 July 2005 is Armenia's main legislation for the 
telecom sector.  Based on the Law, the PSRC has promulgated a number of regulations concerning 
activities in the telecom sector.  The Law has pr ovisions on competitive safeguards, and competition 
policy issues (such as the abuse of dominant position by a telecom operator), which are dealt with 
jointly by the PSRC and the Competition Commission (C hapter V(4)).  ArmenTel has been subject to 
various penalties, including fines for abuse of dom inant position in mobile te lephony in August 2005;  
for failing to provide VoIP services to two companie s in 2007;  and for predatory pricing of internet 
services in 2008.    
71. Since the last of ArmenTel's monopoly rights we re eliminated in 2007 (see above), there are 
no restrictions on the participation of foreign invest ors in Armenia's telecom sector.  All providers of 
public telecommunication networks and services are required to obtain a licence with the PSRC 
before commencing activities.  The assignation of the radio-electric spectrum is carried out via authorizations issued by the PSRC.  It must act upon applications within six weeks of receipt, but it 
may, with notice to the applicant, extend this peri od for an additional three months.  Licences may be 
renewed provided the licensee has operated within  all the conditions of the original licence.
52   
72. Any provider of telecom networks and services,  as defined in the Law, has the right and 
obligation to negotiate with othe r providers on interconnection for the provision of public telecom 
services.  The PSRC regulates interconnection pricing by setting a maximum price for interconnection 
within the fixed network, and setting specific pr ices (which are reduced every six months) for 
interconnection on the mobile network.  The PSRC may also impo se additional access and 
interconnection pricing obligations on a provider with  dominant position, if it considers that its access 
terms are discriminatory.  Interconnection termina tion rates established by a dominant operator should 
be made publicly available.  Disputes between se rvice providers over interconnection terms may be 
submitted to the PSRC for resolution.  Orders to chan ge the interconnection agreement must be issued 
within a maximum of two months.  During 2003-08, the PSRC received four requests for mediation of 
interconnection disputes;  three were resolved through  mediation, and one is still pending.  Appeals of 
PSRC orders may first be reviewed administratively be fore they are brought before ordinary courts of 
law;  at end 2009, no cases had been brought before the courts. 
73. The pricing system for final consumers varies according to the service.  The PSRC sets price 
caps for fixed telephony services, while prices for mob ile phone and internet services are set freely by 
providers and only overseen by the PSRC.53 
74. ArmenTel is still officially considered to have a dominant position in  fixed public telephony 
and international IP transit service markets.54  Armenian legislation does not require the unbundling of 
the local loop.  However, the authorities noted that  telecom providers are investing in wireless local 
                                                      
50 Law on the Regulatory Body for Public Services of 17 January 2004. 
51 PSRC online information.  Viewed at:  http://resolutions.psrc.am/. 
52 Chapter 3 of the Law on Electronic Communications of 8 July 2005. 
53 Information provided by the Armenian authorities. 
54 Information provided by the Armenian authorities. WT/TPR/S/228 Trade Policy Review 
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loop technologies such as WiMAX.55  Numeric portability is not legally required, but the authorities 
are analysing the issue.   
75. Armenia has partially regulated the resale of telecom services, in particular, the PSRC has 
adopted regulations regarding the provision of voi ce over internet protocol (VoIP) services.  Although 
the provision of VoIP services per se  do not require a licence, companies that provide the termination 
of international voice calls must obtain a licence with the PSRC.   
76. The PSRC may include universal service requirements in the licence of any operator or 
service provider.  The legislation provides for the creation of a universal services fund based on services fees paid by all service providers;  however , at end 2009, no fund had been established.  On 
the other hand, the Government has created incen tives for the provision of universal services, for 
example, by giving ArmenTel a discount on spectrum licences used to provide fixed telephony to rural areas via mobile technology.  Cross-subsidies among telecom services are not allowed.
56 
(c) Postal services 
77. Regular postal services are provided nationwide by a closed-stock company owned by the 
State but managed by a private company.  Despite the de facto  monopoly, Armenian legislation does 
not establish any exclusive rights to the state compan y.  Thus, the postal service market is open to 
foreign investors, who have not shown interest so far. 
78. Courier and other express postal services are also liberalized, and there are no restrictions on 
the participation of foreign investors.    
(iv) Transport 
(a) Overland transport  
Overview 
79. Armenia is land-locked, and borders Turkey, Geor gia, Azerbaijan, and Iran;  the borders with 
Turkey and Azerbaijan are completely closed.57  It relies, therefore, on the north-south overland 
corridors for most of its trade (i.e. trade in goods for which airfreight is not feasible or cost effective).
58  Three roads and one railway link Armenia to Georgia and one road links it to Iran.59    
80. Armenia's strategy for 2009-19 is aimed at, inter alia , improving modal integration and 
upgrading its road infrastructure (see below), to fac ilitate international trade, economic development, 
and regional balance.  Armenia part icipates in several international fo ra on transport aimed at creating 
corridors between regions and improving trade flows, including:  the North-South Transport Corridor;  the Transport Corridor Europe-Caucasus-Asia;  th e CIS Transport Coordination Council;  the Black 
Sea Economic Cooperation Organization Working Group on Transport and Communications;  the 
UNECE Trans-European Railway and Trans-Eur opean Motor Highway projects;  the joint 
                                                     
 
55 WiMAX stands for Worldwide Inte roperability for Microwave Access. 
56 Law on Electronic Communications of 8 July 2005. 
57 Road and rail accesses (two roads and one railway for Turkey, and six road s and four railways for 
Azerbaijan).   
58 However, overland access to Russia  through Georgia is restricted:  the north border crossing is 
closed and Georgia's railway along the Black Sea coast is not functioning, which makes the maritime route 
through Georgia's port the only reliable route for merchandise transport to/from Russia.   
59 Ministry of Transport and Communication (2007).     Armenia WT/TPR/S/228
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UNECE/UNESCAP Euro-Asian Transport Linkages project;  the UNESCAP Asian Land Transport 
Infrastructure Development that includes the Asia n Highway and the Trans-Asian Railway projects; 
and the International Transport Forum (former Eur opean Conference of the Ministers of Transport).60 
81. In the services auxiliary to all modes of transport, Armenia reserved customs clearance 
services to licensed customs agen ts established in Armenia. 
Roads 
82. Armenia's road network is relatively well devel oped.  In 2007, it totalled 7,704 km of which 
6,690 km were paved roads.  However,  road density, at 266.5 km per 1,000 km2 (in 2005), remains 
low compared with neighbouring countries such as Azerbaijan (716 km) and Georgia (291.4 km).61    
83. Road transport remains the main means of m oving passengers and freight (Table VI.6):  
around 90% of the volume of domestic fr eight transport is carried by road.62  However, in the north of 
the country, roads are impassable for large haulage trucks in winter, and haulage companies can only 
carry 20 and 40 foot containers from March to October.63  Practically all of Armenia's international 
freight is transported by land and goes through th e Georgian ports of Poti and Batumi on the Black 
Sea.64  Both of these ports are about 700 km from the Armenian border, which takes about four days 
by road and 24 hours by rail.  There is a twice we ekly container train to Poti.  In November 2009, 
transport costs for 20 and 40 foot containers from Yerevan to Poti are US$1,750 and US$2,080, respectively, by road and US$1,250 and US$1,900 by rail. 
Table VI.6 
Overland transport, 2003-07 
 2003 2004 2005 2006 2007 
Total freight ('000 tonnes), of which:    7,061.0 6,734.9 8,280.8 9,676.4 10,296.1 
Rail  2,125.5 2,629.6 2,612.3 2,719.6 2,983.7 
Road 4,086.2 3,153.0 4,479.7 5,730.4 5,864.5 
Freight revenue (dram million), of whic h:   10,038.4 10,585.4 11,584.4 14,422. 7 16,946.2 
Rail  7,787.7 8,715.7 8,040.6 8,936.6 10,375.3 
Road 1,398.4 1,299.9 2,347.8 3,875.1 3,233.1 
Total passenger flow (million), of which:  174.0 185. 6 204.8 245.8 251.8 
Rail 1.1 0.8 0.7 0.7 0.6 
Road 147.5 158.6 174.0 214.0 216.0 
Source: National Statistical Service of the Republic of Armenia (2008), Statistical Yearbook of Armenia ;  and 
 information provided by the Armenian authorities.  
84. Armenia does not have a road fund.  Revenues colleted from excise duties on fuel, from tolls 
on heavy and oversized cargos, and on transit tran sportation, contribute to the general State budget 
and are not reserved for road construction or maintenance.65  Road infrastructure is funded by the 
State budget, and foreign donors (World Bank, the U.S. Lincy Foundation, and the Asian 
Development Bank) have contributed in the past.  The State budget allocation for roads is 
                                                      
60 Ministry of Transport and Communication (undated b). 
61 Latest figures available (Asi an Development Bank, 2008a). 
62 UNESCAP (2005). 
63 ACAM online information, "Arménie:  Guide commer cial:  Transport de marchandises".  Viewed at:  
http://www.acam-france.org/armenie/economie- guide/commerce6.htm [16 June 2009]. 
64 Poti is used for containers and Batumi for oil products.  A ferry service between Poti and Bulgaria's 
port of Varna can transport 40 loaded trucks between Europe and the Caucasus region.  
65 Ministry of Transport and Communication (2006). WT/TPR/S/228 Trade Policy Review 
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concentrated on road maintenance, and increased  from US$15 million in 2004 to US$68 million in 
2008, while foreign investment is concentrated on road construction, and is expected to total 
US$461 million for the 2000-11 period.  The private sector is involved in road construction and 
maintenance but does not finance projects.  Tenders that are to be funded under the State budget are 
implemented under the Law on Procurement (Chapter V( 5));  and tenders financed by international 
financial institutions are implemented in accordan ce with the guidelines of  those institutions.   
85. The main domestic legislation for road tran sport is the Law on Road-Users Toll and the 
Automotive Roads Law.  Under Government Decr ee No. 1720-N of December 2004, Armenia Roads 
SCJSC66 was restructured to form Armenia Roads Directorate NCSO.67  The Armenia Roads 
Directorate operates under the Ministry of Transport and Communication.  Its main functions are to:  
provide technical assistance to the Ministry on road  construction and road use;  monitor the condition 
of roads, traffic intensity, etc.;  prepare progra mmes for the rehabilitation of roads;  and implement 
road rehabilitation programmes f unded by international donors. 
86. The Lifeline Road Network Programme, launche d in 2004, is aimed at rehabilitating local 
roads and improving access from rural areas to the inte rstate and national road networks;  it targets a 
total of 2,700 km local roads, including 784 km of  high priority rural roads.  Rehabilitation and 
maintenance of the existing road network, in partic ular reconstruction of bridges, is a high priority 
under Armenia's Poverty Reduction Strategy for 20 04-15;  total expenditure is dram 387.8 billion.68  
These improvements could encourage more rural producers to engage in foreign trade. 
87. Public transport is provided by privately owne d minibus companies.  Foreign companies can 
provide public bus services.  Like domestic compani es, they must register in Armenia and apply for 
one of the competitions held by Yerevan Municipalit y for each new bus route.  Public bus services are 
provided in Yerevan and throughout  Armenia (although frequency is limited).  Most cities have taxi 
services69;  taxi drivers, irrespective of their nationality, must be licensed by the Ministry of Transport 
and Communications.  Public transpor t and taxi services are not subsidized. 
Rail 
88. The railway network is 827 km long;  726 km are operational.70  The network is fully 
electrified and predominantly single-track.71  Passenger and freight transport remains low, but rail still 
dominates international freight (60% market share by value) (Table VI.6).  Gold ore, cement, cement 
clinker, oil, construction materials, and wheat are the main commodities transported by rail. 
89. Until 2008, Armenia Railways was a 100% gove rnment-owned joint-stock company.  
Following an international tender, Government decision No. 17A in January 2008 announced that 
Russian Railways JSC had won the tender.  In February 2008, the Ministry of Transport and 
Communications and Russian Railways JSC signed a concession agreement, and in April 2008, the 
Ministry issued a licence to Sout h Caucasus Railways, a subsidiary of Russian Railways, to operate 
Armenia's rail system.  The licence concession covers rail freight and passenger services, rail 
                                                      
66 State Closed Joint Stock Company. 
67 Non Commercial State Organization. 
68 Republic of Armenia (2003).   
69 Armenian Development Agency (2008). 
70 Ministry of Transport and Communication (undated b).   
71 Ministry of Transport an d Communication (undated a). Armenia WT/TPR/S/228
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rolling-stock, and rail infrastructure management.72  The licence is for an initial period of 30 years, 
and may be extended after 20 years for a further 20 years.  
90. Under the terms of the concession agreement, Russian Railways acquired the rolling-stock.  
Under the terms of the licence, South Caucus Ra ilways can provide passenger and freight services 
and, in most circumstances, set tariffs.  Howe ver, the Government can set:  railway transport 
infrastructure usage tariffs during emergency situati ons;  tariffs for international transport regulated 
by international agreements;  and tariffs for stra tegic commodities (oil products, soft wheat, seeds, 
weapons, fertilizers, and chemicals).73  
91. The railway infrastructure remains state-owne d.  The authorities confirmed that Russian 
Railways is subject to ordinary tax provisions with  no special tax relief provisions.  There is an 
official subsidy for the loss-making passenger serv ice, which is also cross-subsidized from the 
profitable freight business.  Due to the vital importance of rail transport with Georgia, Armenia requested Russian Railways to adhere to Arme nia's inter-state commitments on standards and 
interchange issues under the Organization for th e Cooperation of Railway s and related regional 
agreements;  and it allows other rail operators (such as Georgian Railways) to use the network at 
pre-determined access fees although Russian Railw ays holds exclusive rights to manage the 
infrastructure.
74   
92. South Caucasus CJSC has committed to invest  US$572 million, of which, 30% will go to 
rolling-stock and the rest to improving infrastructur e.  The Asian Development Bank has also agreed 
to fund a feasibility study for the Armenia-Iran railway  priority project;  an additional feasibility study 
for the Vanadzor-Dilijan link is needed.  Rehabilit ation of the Yerevan-Tbilisi line has been in 
progress since 2008. 
(b) Air transport 
93. Armenia has two international airports:  Zvartnot s in Yerevan, and Shirak in Gyumi.  While 
civil aviation companies may also operate from Erebuni airport, no passenger or freight services are operating.   Since 1990, 12 local airports ceased operations and were transferred to the Ministry of 
Defence or to local self governing bodies.  One a dditional local airport, which was included in the 
civil aviation system in 1990, also ceased to operate  in 2006 due to lack of demand.  International 
passenger flow has increased steadily since 2003.  D espite increases in volume and revenue, the share 
of air freight in total freight transport remains low (Table VI.7).   
94. The legal framework for civil aviation is made  up of international agreements signed by 
Armenia and the Law on Aviation of 2007, which replaced the Law on Aviation of 2000.  The 
General Department of Civil Aviation (GDC A), the State regulatory body for aviation
75, elaborates 
and implements air transport policies, and administers and supervises aviation services.  Its responsibilities include issuing certific ates, permits, and licences for civil aviation activities, including 
certificates for aircraft, permits for operating commercial air transport, and licences for flight 
operations personnel, air traffic controlle rs, and aircraft maintenance personnel.
76  A r m e n i a  i s  a  
member of the International Civil Aviation Or ganization (ICAO), the European Civil Aviation 
                                                      
72 Commission of the European Communities (2005). 
73 The list of strategic commodities is set out in Government Decision No. 1057 of August 2008 
74 Ministry of Transport and Communication (undated a);  and Railway Gazette , "Armenia looks to the 
private sector", 15 Januar y 2008.  Viewed a t: http://www.railw aygazette.com/news_view /article/2008/01/8075/ 
armenia_looks_to_the_private_sector.html. 
75 Commission of the European Communities (2005). 
76 Decision No. 202-N of 13 February 2003.   WT/TPR/S/228 Trade Policy Review 
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Conference, the European Organization for the Safety  of Air Navigation, and the Interstate Aviation 
Committee.77   
Table IV.7 
Air transport indicators, 2003-09 
 2003 2004 2005 2006 2007 2008 2009a 
Total international passenger flow (m illion) 0.9 1.1 1.2 1.2 1.4 1.5 1.2 
Total international air freight ('000 tonnes) 8.7 9.2 9.3 9.3 10.0 10.8 7.0 
Air freight revenue (dram million) 1,398. 4 1,299.9 2,347.8 3,875.1 3,233.1 4,274.5 2,580.5 
Share of air freight in total freight transportation (%) 0.1 0.1 0.1 0.1 0.1 .. .. 
Share of air freight in total freight turnover (%) 0.3 0.5 0.5 0.5 0.5 .. .. 
.. Not available. 
a From January to October. 
Source:  National Statistical Service of the Republic of Armenia (2008), Statistical Yearbook of Armenia ;  and information 
 provided by the Armenian authorities. 
95. Zvartnots International Airport is the main ga teway to Armenia, with several international 
airlines and one domestically owned airline ope rating commercial flights to 48 destinations.78  I n  
2008, it handled 372,179 passengers ( 98.4% of the total passenger fl ow) and 2,709 tonnes of freight 
(99.4% of total air freight).79  Zvartnots airport belongs to the State, but its management was handed 
over to a foreign private company (American Inte rnational Airports LLC) via a 30-year concession 
contract in 2002.80  The management company plans to invest some US$390 million during its 
concession to upgrade the airport.  Its new passenge r terminal, with a capacity of 2 million passengers 
per year, has been fully operational since 2007 and its cargo terminal handles 100,000 tonnes of freight annually.
81  Slot allocation procedures are regulated by GDCA and follow the respective EC 
Normative on the subject. 
96. In 2007, Armenia International Airports CJ SC was granted a management concession to 
operate the State-owned Shirak airport.82  As a result, the airport's runway was completely renovated, 
and received a new certificate of operation from the ICAO.  
97. All passengers departing from Armenia are char ged with an exit tax of dram 10,000 (some 
US$29), which is levied at the moment of sale of the ticket.  The following are exempt from the exit 
tax:  children under 12 years of age;  transit and transfer passengers;  World War II veterans;  and 
passengers of regional flights (with in a radius of 450 km).   
                                                      
77 General Department of Civil Aviation online information.  Viewed at:  http://www.aviation.am/eng/ 
[12 June 2009];  and EUROPA Press Release IP/08/1917, "EU signs aviation agreement with Armenia", 9 December 2008.  Viewed at:  h ttp://europa.eu/rap id/pressReleasesAction.do ?reference=IP/08/1917. 
78 Armenian Development Agency (2008).  
79 General Department of Civil Aviation online information, "Statistics".  Viewed at:  
http://www.aviation.am/eng/statistics.htm. 
80 EBRD online information, "Project Summary Do cument".  Viewed at:  http://www.ebrd.com/ 
projects/psd/psd2008/39334.htm;  and Armenian Development Agency online information, "Transport".  
Viewed at:  http://www.ada.am/html/infrastructure.html.  
81 General Department of Civil Aviation online information.  Viewed at:  http://www.aviation.am/eng/;  
and Armenian Development Agency online information,  "Transport".  Viewed a t:  http://www.ada.am/html/ 
infrastructure.html. 
82 General Department of Civil Aviation online information.  Viewed at:  http://www.aviation.am/eng/ 
[12 June 2009]. Armenia WT/TPR/S/228
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98. Armenian Air Traffic Service (ARMATS), created in 1997, provides air navigation services 
(including traffic control, co mmunication, navigation, and surv eillance services) and aeronautical 
information services for Armenia's airspace, in  compliance with international civil aviation 
standards.83  ARMATS is a joint-stock company with 100% of its shares belonging to the State.  
99. Armenian legislation does not restrict the partic ipation of foreign investors in air transport 
services (either for passengers or cargo), thus, ai rlines may be fully owned by foreigners. 
100. Armavia, Armenia's largest airline, has been operating commercial flights since 2002.84  I t  
carried 26% more passengers in 2008 (646,447 passe ngers) than in 2005.  On the other hand, its 
market share decreased slightly, from 44.5% in 2005 to 42.9% in 2008.  Its fleet consists of eight 
aircraft and it employs 480 people.85  Armavia is privately owned;  control is in the hands of an 
Armenian company that holds 70% of the shares, while the remaining 30% are held by a Russian 
partner company.  When state-owned Armenian Airlines was liquidated in 2004, Armavia took over 
its licence to operate international flights.  In 20 05, Armavia also took over flights to Europe when 
Armenian International Airways ceased operations.86   
101. Air Armenia is the only air cargo company b ased in Armenia;  it is a private company 
founded in 2003.  Since other airlines provide cargo services on their passenger flights, it is estimated 
that Air Armenia had a 59% market share of th e air cargo shipments from and to Armenia in 2008.87  
It operates regular scheduled cargo flights from Yere van to Frankfurt.  There is no agreement with 
Germany in this respect;  the decision to use Fra nkfurt as a logistics base was purely commercial, and 
shipments weighting over 10 tonnes do not usually transit through Frankfurt.88  The cost of shipment 
depends on the weight and starts at €1.20/kg for th e Yerevan to Frankfurt route and €1.8-2.4/kg for 
Frankfurt to Yerevan. 
102. At the end of 2009, Armenia had 42 bilateral air services agreements in force, mainly with 
European and Middle Eastern partners.89  Armenia signed a horizontal agreement on certain aspects of 
air services with the EU in December 2008, howev er for issues such as route rights and capacity 
determination, the bilateral agreem ents with EU Member states prevail.  Another important bilateral 
air services agreement, in terms of traffic generated, was signed with the United States in 
November 2008 and entered into force on 16 June 2009.  The agreement with the Unites States can be classified as liberal
90 since it grants 3rd, 4th, and 5th freedoms of the air, and it establishes substantive 
ownership and effective control of airlines, mu lti-designation of points, free determination of 
capacity, and free pricing.91 
                                                      
83 ARMATS online information, "About us".  Viewed at:  http://www.armats.com/eng/onas/onas.htm.   
84 Commission of the European Communities (2005). 
85 Armavia online information.  Viewed at:  http://www.armavia.am.   
86 Armavia online information.  Viewed at:  http://www.armavia.am.   
87 Information provided by the Armenian authorities. 
88 Information provided by the Armenian authorities. 
89 Austria, Bahrain, Belgium, Belarus, Bulgaria, China, Cyprus, Czech Republic, Denmark, Egypt, 
Estonia, European Union (EU), France, Germany, Georgi a, Greece, India, Iran, Irela nd, Israel, Italy, Jordan, 
Lebanon, Luxembourg, Kazakhstan, Kuwait, Kyrgyz Re public, Norway, Poland, Qatar, the Netherlands, 
Romania, Russia, Sweden, Switzerland , Syria, Turkmenistan, Ukraine, Un ited Kingdom, United Arab Emirates, 
United States, and Uzbekistan.     
90 WTO Secretariat QUASAR methodology (WTO online information, "Services: Air Transport 
Services:  Second Review".  Viewed at:  http ://www.wto.org/english/trato p_e/serv_e/transport_e/ 
review2_e.htm). 
91 General Department of Civil Aviation online information.  Viewed at:  www.aviation.am/eng/.  WT/TPR/S/228 Trade Policy Review 
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(v) Professional services 
(a) Legal services92 
103. Armenia's new Law on the Profession of Advocates , enacted in 2004, provides for the 
establishment of the Chamber of Advocates (the Chamber) and the eligibility criteria for advocates.93  
The Chamber was established in 2005 and unified Ar menia's bar unions (i.e. the Union of Advocates 
and the International Union of Advocates).  It is the regulatory authority responsible for, inter alia , 
licensing advocates, protecting their rights, an d conducting disciplinary proceedings.  Other 
associations are also active in capacity building fo r legal professionals, supporting the rule of law, 
improving awareness of Armenia's obligations under international legal treat ies, and developing an 
independent judiciary power.94   
104. Legal services are provided by advocates or non- advocate lawyers.  Advocates are members 
of the Chamber, who are licensed by the Chamber after having passed a qualification examination.  
The exam, which was reintroduced in 2006, is set  by the Chamber's Qualification Commission.  
Anyone with a law degree and two years experi ence in a legal position may apply to sit the 
examination.  An advocate needs a licence to repre sent clients at civil, administrative, or criminal  
proceedings, while individuals have the right to represent themselves should they so wish.95  Licences 
are issued for an indefinite period;  however , the Chamber may suspend or withdraw them.  
Advocates pay fees to the Chamber, including th e examination fee (dram 35,000), the licence fee 
(dram 50,000), and the membership fee (dram 3,000/m onth).  They are free to work independently or 
in firms.  In 2008, there were 825 advocates in Armenia.      
105. Non-advocate lawyers are not members of  the Chamber.  They work within  private 
companies, governmental agencies, NGOs or indepe ndently, and can represent clients in civil and 
administrative cases only.  Their activities are not regulated.  
106. Foreign lawyers are allowed to practice as advocat es in Armenia.  They must have a licence 
from their home country and abide by the Law on the Profession of Advocates, the Charter of the Chamber of Advocate, and the Code of Conduct for Advocates.  They have to be accredited to the 
Chamber but are not required to take the Chambe r's qualification examination or language tests.   
Foreign lawyers use their home licence;  where this has been withdrawn in their home country, they 
are removed from the list of advocates.  They may not  provide legal assistance on issues related to the 
State or state secrets.  Although accredited to the Chamber of Advocates, they may not become members of the Chamber.  Furthermore, in lega l activities, notarising services are reserved to the 
State.   
107. The enactment of the new Law on the Profession of Advocates in 2004 and the creation of the 
Chamber improved the provision of legal services in Ar menia.  However, it has been pointed out that 
two major concerns remain:  firstly, a person w ith no educational or professional legal background 
can still assist and represent clients in civil a nd administrative cases; and secondly, legal services 
                                                     
 
92 American Bar Association (2008). 
93 It replaced the 1998 law, which had established advocates as private practitioners, had made them 
independent from the Ministry of Justice, and had provided ethical guidelines.  
94 These include the Bar Association of the Repu blic of Armenia, the Armenian Young Lawyers 
Association, the Armenian Association of International Law, and the Association of Judges of the Republic of 
Armenia.   
95 Until end 2008, special licences were issued for criminal proceedings.  They were recognized 
unconstitutional and repealed from the law.  Armenia WT/TPR/S/228
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provision is still affected by the perception of endemic corruption.96  These concerns are being 
addressed through structural and legal reforms, such as amendments to the Constitution and the 
judicial code. 
(b) Accounting and auditing services 
108. The legislative basis for Armenia's accountancy  and other financial re porting requirements is 
the Law on Accounting, which entered into effect in 1998 and has been amended a number of times 
since then.  Before December 2008, the statutory accounting standards used in Armenia were the 
Accounting Standards of the Republic of Armeni a (ASRA), which were based on International 
Accounting Standards (IAS) of 2000 but were not updated.  According to reports this created a 
standards gap between more recent IAS and the ASRA.97   
109. This standards gap was addressed in the De cember 2008 Law on Ma king Amendments and 
Additions to the RA Law on Accounting.  The fo llowing entities are, or will be, required to present 
their financial statements in compliance with In ternational Financial Repor ting Standards (IFRS):  
banks (from 1 January 2009);  no n-banking financial institutions98 (from 1 January 2010);  and other  
business entities (with effect from 1 January of the year following a six-month period after the IFRS 
and IFRIC interpretations have been officially adopted by the Government).99  The Amendment of 
December 2008 also requires all large companie s to undergo an annual audit and publish their 
financial statements annually.100  Entities with turnover of less than dram 100 million will apply 
accounting only for tax purposes;  the Government D ecree to bring this into force is expected in 
early 2010.   
110. Implementation of IFRS requires their translation into Armenian.  To this end, the Ministry of 
Finance has established the Official Translating Co mmittee, composed of tr anslators and accounting 
and audit professionals, which is re sponsible for translating IFRS a nd their guides and interpretations 
into Armenian.   
111. Until August 2009, to be recognized by the Minist ry of Finance, accountants and auditors had 
to meet its educational and professional experience requirements101, and pass its certification exam.  
The certificates were valid for five years after which the account ants or auditors exams had to be 
repeated.  Between 2006 and 2008, about 222 people  sat the exam for the accountants certificate and 
199 sat the exam for the auditors certificate.  The pass rates were 38% and 26%, respectively.102   
                                                      
96 American Bar Association (2008). 
97 Asian Development Bank (2008b). 
98 Non-banking financial institutions are:  credit settlement organizations, payment organizations, 
reporting issuers at the Securities Market, investment companies, the regulatory market operator, the Central 
Depository, insurance and reinsurance companies, and insurance brokers 
99 American Chamber of Commerce in Armenia online information, "International Financial Reporting 
Standards (IFRS) in Armenia:  Status Update".  Viewed at:  http://www.amcham.am/ 
index.cfm?objectid=851E352C-5BF8-11DE-A3C20003FF3452C2  [October 2009]. 
100 A "large company" is defined as one that had, at the end of the previous year, either a turnover of 
more than dram 500 million, or a book value of total assets that exceeded dram 500 million.  However, the 
authorities state that, for 2010, the threshold for turnover or total assets will be dram 1 billion. 
101 For auditors the professional and educational requirements are:  higher education in economics and 
three years experience out of the prev ious five years; or, if the candidate has higher education in another 
discipline, then five years experience out of the previous  seven years.  For accountants the requirements are:  
higher education in economics or working in a company th at provides financial statem ents, with that company's 
permission to participate in the programme.  
102 World Bank (2008). WT/TPR/S/228 Trade Policy Review 
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112. Since August 2009, under a government decree on accreditation of professional bodies, the 
Association of Accountants and Auditors of  Armenia (AAAA) has been recognized as the 
professional association that represents both accountants  and auditors.  The AAAA was established in 
1997 and became an associate member of the In ternational Federation of  Accountants (IFAC) in 
2005.  The AAAA has a certification scheme based on the Association of Chartered Certified 
Accountants.  Under the Government decree on accr editation, all who have passed IFAC-recognized 
exams are recognized as certified accountants or auditors  (as are those that had passed the Ministry of 
Finance's exam).  According to the authorities, the Government has stopped running its exams for 
accountants and auditors;  the AAAA will continue to run its internationally recognized exams. 
113. The AAAA's system of certification has three levels:  certified bookkeeper; certified 
accountant; and certified auditor.  As of June 200 8 the AAAA had about 239 qualified bookkeepers, 
20 qualified accountants and 11 qualified auditors.103  There are no restrictions on non-Armenian 
individuals or enterprises setting up accountancy firm s or audit companies in Armenia, provided they 
meet Armenian legislative requirements.  In 2009, it was reported that there were 22 audit companies, 
including several international firms,  and 11 private auditors in Armenia.104   
114. As of November 2009, there were 189 qualified accountants and 106 auditors (including 
32 with internationally recognized qualifications).   A number of foreign accountancy firms have 
established themselves in Armenia including  three of the Big Four auditors.  
(vi) Tourism 
115. Tourism is estimated to have contributed 2. 1% to GDP and 8.3% to employment in 2008.105    
Armenia's visitors come mainly from countries with large diaspora co mmunities (e.g. Russia, 
Georgia, Iran, the United States, France, Germany, and Ukraine).  The main reason for visiting Armenia is, therefore, visiting friends and relativ es (44.8%), followed by business/conference (22.4%) 
and leisure tourism (11.6%).
106   
116. Armenia has good potential to attract t ourism given its well preserved natural and 
cultural/historical attractions, including some UNESCO Wo rld heritage sites.  It also has the potential 
to develop sport, adventure, and winter touris m.  However, despite improvements in tourism 
indicators (Table VI.8), high flight costs a nd limited schedules, as well as high taxes on passengers107, 
appear to have affected negatively tourism, wh ich is also hampered by other factors such as 
underdeveloped infrastructure (transport and accommodation).   
117. Armenia's tourism policy and strategy are impl emented by the Tourism Department at the 
Ministry of Economy.  Under the 2008 Tourism Concept Paper, the objective is to increase the 
contribution of tourism to GDP to 12% by 2030, with a view to alleviating poverty and ensuring 
balanced development among the regions.  The ke y policy targets are to increase:  the number of 
visitors per year (to 3 million);  tourism earnings (to US$3 billion);  and tourism-related employment.  
These targets are to be met by:  improving infr astructure and accessibility (e.g. expanding flight 
frequency and connections, and relaxing the entry and departure procedures);  making Armenia a 
                                                      
103 Association of Accountants and Auditors of Armenia online information, "News of Education."  
Viewed at:  http://www.aaaa.am/mai npage.php?page=5 [October 2009]. 
104 Banks.am , "Legislative changes in audit sphere will l ead to a number of significant consequences 
for Armenia", 13 July 2009.  Viewed a t:  http://www.banks.am/ en-news-3-3685.html. 
105 World Travel and Tourism Council (2009). 
106 USAID et al. (2007). 
107 Taxes include entry (visa) and depa rture fees (section (iv) above).   Armenia WT/TPR/S/228
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competitive tourist destination with unique and high quality tourism services and products;  and 
training the workforce.108 
Table VI.8 
Selected tourism indicators, 2003-08 
 2003 2004 2005 2006 2007 2008 
Tourist arrivals 123,262 262,685 318,563 381,136 510,287 558,443 
Revenue (US$ million) 90 188 240 307 333 .. 
Average spent per day (US$) 30 30 30 35 36 36 
Rooms (No.) 2,455 2,638 2,914 3,109 3,654 4,195 
Room occupancy (%) 25 25 22 22 25 .. 
Beds (No.) .. .. .. .. .. 8,376 
Average length of stay (days) 15 15 17 17 20 20 
..  Not available. 
Source:  Baghramyan M. and Ghushchyan V. (2008), "Impli cations of Armenian Dram Appreciation for the 
Competitiveness of Armenian IT, Tourism, and Food Processing Industries", Armenian Journal of Public Policy , 
Volume 3, No. 1, March;  USAID,  CAPS, Armenian Tourism Developmen t Agency, and Armenian Development 
Agency (2008), Armenian Tourism Industr y:  Investment Handbook , August;  and information provided by the 
Armenian authorities.  
118. The two recently signed bilateral air services agreements with the EU and the United States 
support the objective of the Concept Paper by a llowing for the expansion of the number of 
international flights;  as does the Government's  decision to grant concession contracts for the 
management of Armenia's internati onal airports (section (iv)(b) above ).  In addition, the authorities 
noted that a Government Decree of 16 October 2008 adopted a programme for the sector that includes 
improving the legal framework regulating the touris m sector, improving the statistical system, and 
developing an efficient management model for State historical and cultural sites.  
119. The Law on Tourism, adopted in 2003, is Armenia's main tourism-related legislation.  It sets 
out the principles and objectives of the national po licy as well as the Government's role in the 
implementation process and the provisi on of tourism services.  The Gove rnment intends to review the 
law, based on best practices in international tourism legislation.109  
120. The Armenian Tourism Development Agency (ATDA) was established in June 2000 to 
promote and market Armenia abroad, in order to mo re effectively meet the objectives of the Concept 
Paper (see above).  It was termin ated in 2009, and the Government passed its functions to a wider 
reaching public organization, the National Competitiveness Foundation of Armenia.    
121. Tourist guides must be licensed by the Ministry of Economy;  licensing is subject to a levy 
(dram 3,000 examination fee and dram 10,000 annual fee).110  The current licensing examination is 
being reviewed by the Guild of Armenian Guides (GAG) to ensure compliance with the requirements 
of the World Federation of Tourist Guide Associations.111  Any natural person, regardless of 
nationality or citizenship, may apply to obtain a tou r-guide licence if they meet the requirements of:  
higher education with specialization in tourism, and minimum of two years of work experience as a 
tour guide.  Although tour operators and travel agents do not require a specific licence, they must 
register at the State Registry of Legal Entities (Chapter V(1)).     
                                                      
108 USAID and CAPS (2008).   
109 USAID et al. (2008). 
110 Article 12 of Law on Tourism of 2003. 
111 USAID et al. (2008). WT/TPR/S/228 Trade Policy Review 
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122. Accommodation establishments are certified, on a voluntary basis, by the Ministry of 
Economy.  Certificates are valid for five years, renewable, and granted upon a site visit by the 
Classification Commission (composed of inspectors from various government agencies, consumers, 
architects, and representatives of the tourism sect or).  Certification procedure fees vary from 
dram 150,000 (some US$430) for 1-star hotels, to dram 1,250,000 (some US$3,571) for 5-star hotels.    
123. There are no restrictions on foreign inv estment in hotel services; FDI totalled 
US$19.3 million in 2007 (3% of total FDI).  Tourism activities are carried out mainly by SMEs with limited scope to invest significantly in the subsector.  The level of public and private investment is currently low and will need to be increased by aro und US$2.5 billion to further develop the sector in 
accordance with the objectiv es of the Concept Paper.
112  The Government plans to actively encourage 
investment though bonds, bank guarantees, and special  programmes in order to attract partnerships 
with the private sector and foreign donors.113  
124. Armenia has been a member of  the UNWTO since 1997.  It has agreements on cooperation in 
tourism with members of the Black Sea Economic C ooperation, as well as with Argentina, Belarus, 
Bulgaria, China, Cyprus, Egypt, Greece, India, Iran, Kyrgyz Republic, Lebanon, Moldova, Poland, 
Romania, Russia, Syria, Ukraine, and United Arab Emirates. 
                                                      
112 USAID and CAPS (2008). 
113 Grant Thornton (2008). Armenia WT/TPR/S/228
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